Ukraine, Slovakia Agree on Gas Flow to Cut Russian Supplies

Ukraine agreed with Slovakia on shipping gas through the eastern European Union member as it seeks to lessen dependence on Russian supplies amid escalating clashes with pro-Russian forces in the country’s east.

Eustream AS, Slovakia’s pipeline operator, and UkrTransGas AC, Ukraine’s gas company, signed a memorandum allowing the idle Vojany pipeline, with an annual capacity of up to 9 billion cubic meters, to transport gas from western Europe to Ukraine. The sides will continue to explore the possibility of larger shipments that would fully cover current imports from Russia, according to the accord.

The EU and the U.S. are seeking new supply sources to Ukraine, including reversing pipelines, as the new Kiev government plans closer ties with the EU. Ukraine is facing the threat of a cut in Gazprom supplies after the company raised its prices 81 percent and demanded $2.2 billion in back payments and an additional $11.4 billion for gas the country was obliged to buy.

“This is an important first step for diversification” of Ukraine’s gas supplies, said European Union President Jose Manuel Barroso at the signing ceremony. “It contributes to greater energy security in eastern Europe and the EU as a whole.”

Full coverage of the Crisis in Ukraine:

The flows will begin in September at 22 million cubic meters a day, or 8 billion cubic meters annually, after 400 meters of new pipes are laid, Ukrainian Energy Minister Yuri Prodan told journalists after the ceremony.

Diversifying Supplies

Ukraine, which already receives gas from Poland, has demanded that the spare capacity of the main cross-border pipeline, a key transit route for Russian gas to the west, be used for reverse flow.

The EU will assist Ukraine and Slovakia in talks with Gazprom whose consent is needed for such a solution, Prodan said. The country will also “soon” start receiving gas from Hungary via a link with a capacity of 16 million cubic meters per day, Prodan said.

A Snapshot of Ukraine's Past and Future

More than 50 billion cubic meters of gas from Gazprom transited to European nations last year through the pipelines operated by Eustream. For its own needs, Slovakia imported 5.4 billion cubic meters.

Russia shipped 25.8 billion cubic meters of gas to Ukraine last year, including supplies to state-owned NAK Naftogaz Ukrainy, or about 71 million cubic meters per day, meeting half of the nation’s demand, according to data from Gazprom.

To contact the reporter on this story: Radoslav Tomek in Bratislava, Slovakia at rtomek@bloomberg.net

To contact the editors responsible for this story: James M. Gomez at jagomez@bloomberg.net

Press spacebar to pause and continue. Press esc to stop.

Bloomberg reserves the right to remove comments but is under no obligation to do so, or to explain individual moderation decisions.

Please enable JavaScript to view the comments powered by Disqus.